This policy explores how Western nations are rethinking their defence industrial strategies to address geopolitical threats, fragile supply chains, and innovation gaps. It highlights a shift from narrow procurement-focused approaches to comprehensive industrial policies that combine demand-side and supply-side tools. The paper identifies coordination failures, externalities, and public good deficiencies as core market issues, advocating for policies that build industrial resilience, foster innovation, and expand state capacity to effectively manage the defence sector.
